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Bedtime Bedding Ltd. manufactures pillows. The Cover Division makes covers, and the Assembly Division makes the finished products. The covers can be sold separately for $5.00. The pillows sell for $6.00. The information related to manufacturing for the most recent year is as follows:

Cover Division manufacturing costs    $6,000,000
External sales of covers by Cover Division   $4,000,000
Market value of covers transferred to Assembly   $6,000,000
Sales of pillows by Assembly Division   $7,200,000
Additional manufacturing of Assembly Division   $1,500,000

Required:
Compute the operating income for each division and the company as a whole. Use market value as the transfer price. Are all managers happy with this concept? Explain.
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
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